Labor Economics and Welfare Economics - Research Paper Example

Second, utility is interpersonally similar and can be summed up (Rothbard, 2006). Early labor economics began shortly after the Second World War with its analytical range emerging further from the field of conventional economics. As a result, economists found labor economics a hard domain in terms of explaining the term in a strict economic logic (Burns, 2012). Adam Smith first expressed support for the idea of economics in labor in his 1776 work “Wealth of Nations.” During the mid-1700s, traditional political economy was successful ad prevailing in the domain of economic hypothesis and review between the 1700s and 1800s (Winter-Ebmer, 2014).

This economy operated on the basis that capitalist market powers work do not assure that employees will get equal portions of the output. Afterwards, David Ricardo and Karl Marx extended this classical economy and made labor economics reach its climax during the mid-1800s. Marx cultivated his labor hypothesis of value and utilization to show how employees get just a portion of their output, with the remaining portions creating an economic excess adopted by capitalists for the sustenance of their consumption and investment operations (Burns, 2012).

Welfare economics had more supporters than labor economics, with economists and researchers such as William Stanley Jevons, Carl Menger and Leon Walras leading the way by spreading the idea of marginal utility. Daniel Bernoulli issued a validation of marginal utility in 1738 under his Expected Utility Theory and contributed significantly to Welfare economics (Devarajan, 2014). Lastly, economist Hermann Heinrich Gossen expounded on an overall hypothesis of marginal utility to help further welfare economics across Europe (Rothbard, 2006).

Opponents of labor economics warned against misunderstanding the word “labor” as specially connected to understandings acquired from the fields of sociology, politics, and organizational culture (Burns, 2012).